Wrongful Dismissal – The Ultimate Legal Guide
If an employer does not follow the correct procedures when dismissing an employee, they may face a claim of wrongful dismissal and a potentially large compensation payout. Most commonly, wrongful dismissal involves sacking an employee without notice and without payment in lieu of notice.
Employment termination can be complex and challenging, and understanding your rights and responsibilities is essential.
This handy guide provides expert advice to help you through the wrongful dismissal process. Whether you are an employee pursuing redress or an employer seeking to avoid or minimise a wrongful dismissal claim, we’ll equip you with all the necessary knowledge.
Wrongful dismissal - key stats
- Employers can bring a wrongful dismissal claim to an employment tribunal or the civil courts. The maximum award for a wrongful dismissal claim at an employment tribunal is £25,000. There is no such cap in the civil courts.
- Unlike unfair dismissal claims, employees do not have to have been employed for two years to claim wrongful dismissal.
- The time limit to make a tribunal claim is three months less a day*, and the time limit to make a civil claim is six years.
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What is wrongful dismissal?
Wrongful dismissal happens when an employer violates the terms of the employment contract when firing an employee. To make a wrongful dismissal claim, the employee must prove that they were dismissed in a way that breached their contract and that they suffered a loss because of this breach.
Wrongful dismissal claims focus on contractual breaches rather than breaches of statutory employment rights. As such, wrongful dismissal differs from unfair dismissal, which occurs when an employer terminates an employee’s contract in a manner considered unjust, unreasonable, or improper according to the law.
A sacking may result in independent claims for both wrongful and unfair dismissal. However, a dismissal may be wrongful but not unfair. For example, an employer may have dismissed an employee for a legitimate and fair reason, but if they did not follow the correct termination procedures, that dismissal may still be wrongful.
Employers must ensure they understand and follow the employment termination options to stay legally compliant.
Examples of wrongful dismissal UK
Over the years, several cases of wrongful dismissal have been heard in the UK. In one potentially high-profile case,Body Shop staff were advised to claim wrongful dismissal after the retailer sacked hundreds of employees at a moment’s notice.In this case, office staff were told over Microsoft Teams that they would not be paid beyond the end of the day and would not be given any form of redundancy package from the company.
Instances of wrongful dismissal in the UK involve:
- Treating trivial performance issues as gross misconduct in order to justify sacking an employee
- Dismissing an employee without warning for matters that would not be considered gross misconduct
- Termination of a fixed-term contract before it has expired
- Breaching contractual redundancy procedures, and in particular, failing to provide the proper notice period
- Other breaches of contractual disciplinary or redundancy procedures.
Common types of wrongful dismissal claims
An employee is wrongfully dismissed if the employer fails to follow its contractual obligations. As such, employers must give employees sufficient notice of termination and follow the steps outlined in the employment contract.
Wrongful dismissal can take various forms, but understanding the most common types of claims helps ensure employers maintain fair employment practices and reduces the chances of legal action.
- Breach of notice period
The most common type of wrongful dismissal claim is breach of notice period. It occurs when an employer sacks an employee without providing the requisite notice period or PILON. The applicable notice period will either be outlined in the employment contract or mandated by employment law.The statutory notice period requirements are:
- One week for staff whose length of service is between one month and two years
- Two weeks for staff whose length of service is at least two years
- One week for every year of service after the employee’s second year up to a maximum of twelve weeks.
If a notice period is not expressly stated in the employment contract, the statutory minimum will apply.
However, in some cases, where there is no express notice period, the employee may be entitled to longer than the statutory minimum depending on their role and length of service. Legal advice is strongly recommended to ensure employers get this right.
- Breach of fixed-term contracts
If an employee is on a fixed-term contract or a contract for a specific task, and the employer terminates the contract before it expires, this will likely amount to wrongful dismissal.
However, there are some exceptions, including where the employee is guilty of gross misconduct. The contract may also have provisions that entitle the employer to give notice of early termination. - Contractual breaches
An employee will likely have a claim for wrongful dismissal if there is a contractual obligation to follow a particular procedure before terminating their employment contract and the employer fails to adhere to this.
Wrongful dismissal claims may also arise after an employee has resigned in response to an employer’s breach of contract. For example, where an employee has not been paid. This is known as constructive dismissal.
Who can claim wrongful dismissal?
- Individuals who were employed under a contract of employment, whether written or verbal
- Individuals who worked under a contract for services if they had an agreement that guaranteed a notice period
- Individuals who were forced to resign due to an employer’s breach of contract (constructive dismissal)
- Employees on their probation period.
Wrongful dismissal vs unfair dismissal
Wrongful dismissal differs from unfair dismissal. Wrongful dismissal happens when an employer breaks the provisions of an employment contract when dismissing an employee.
In contrast, unfair dismissal occurs when an employer terminates an employee’s contract without a just reason for doing so.
In the UK, there are only five legally accepted reasons for firing an employee. Find out what they are on our unfair dismissal page.
A firing may result in independent claims for wrongful and unfair dismissal.
| Wrongful Dismissal | Unfair Dismissal | |
| Length of service | Employees can make a wrongful dismissal claim, regardless of how long they have been employed. | In most unfair dismissal cases, individuals must have been continuously employed by an employer for at least two years to be eligible to make a claim. |
| Avenue for redress | Wrongful dismissal claims are breaches of contract, so employees can pursue them in the civil courts or at an employment tribunal. | Unfair dismissal claims can only be brought at an employment tribunal. |
| Point of Law | The court or tribunal will establish whether a breach of contract has occurred. | The employment tribunal will establish the fairness of the dismissal. |
| Defence | Employers may rely on facts uncovered after the dismissal. | The employment tribunal will consider whether the employer believed the dismissal to be fair at the time of the firing. |
Wrongful dismissal under two years
Employees are only granted statutory protection against unfair dismissal after two years of service. This means that employers can usually dismiss individuals who have worked for them for less than two years without a legally acceptable reason.
However, if the correct termination processes are not followed, employees may still be able to claim wrongful dismissal, even if they have yet to accumulate two years of service.
Wrongful dismissal during probationary period
If an employer fails to give notice or does not follow the termination process set out in the employment contract, even employees who are on probation can claim wrongful dismissal.
Unlike unfair dismissal claims, staff don’t need to have been employed for a set period to make a claim. As such, employers must follow the correct procedures when dismissing all staff, including those on probation.
How much compensation for wrongful dismissal?
Wrongful dismissal damages are awarded to put employees back in the position they would have been if their contract had been terminated correctly. If an employee is wrongfully dismissed, they will likely be entitled to the total value of wages and any other benefits they would have received if they had worked their notice period. Such benefits include bonuses, pensions, etc.
The maximum award for a wrongful dismissal claim at an employment tribunal is £25,000. However, there is no compensation cap if an employee pursues their case via the civil courts.
Dismissals with payment in lieu of notice (PILON)
An employer can pay an employee in lieu of notice (PILON) rather than letting them work their notice period. PILON is a good option if having the employee continue to work is likely to cause disruption or risk to business operations.
PILON clauses are standard in employment contracts. However, an employer can still offer PILON, even if the provision is not included in the contract. If an employee accepts a PILON, they cannot claim wrongful dismissal. However, they do not have to agree to payment in lieu of notice if it’s not in their contract.
Wrongful dismissal – FAQs
Starting a wrongful dismissal claim in the UK involves several steps. Before initiating a claim, it’s advisable to seek legal advice from a specialist employment solicitor. They can assess the circumstances of your dismissal, advise you on the strength of your case, and guide you through the process.
If you do have a wrongful dismissal claim, and you want to pursue this via an employment tribunal, you must first notify the Advisory, Conciliation, and Arbitration Service (Acas) and participate in early conciliation.
ACAS will attempt to facilitate a settlement between you and your employer to resolve the dispute without going to a tribunal. However, if early conciliation does not result in a settlement, your solicitor will lodge your claim with an employment tribunal and prepare your case for the hearing.
Employment tribunals deal with employment law cases, including wrongful and unfair dismissal claims. At the tribunal, both parties have the opportunity to present their evidence and arguments. If you win your case, and the tribunal decides that the employer did not follow the correct steps when dismissing you, your employer may be ordered to pay you compensation.
There are strict time limits for bringing wrongful dismissal claims to an employment tribunal, so early legal advice is recommended.
An employer can only dismiss an employee without giving notice in very specific circumstances, such as serious breaches of their employment contract.
If an employee is dismissed for gross misconduct, the employer does not have to provide a notice period or notice pay. This is called summary dismissal. However, the employee must be paid for any work they have completed, any accrued holiday pay, any contractual benefits, and outstanding expenses.
Even in cases of gross misconduct, employers should still follow a contractual disciplinary procedure to avoid potential wrongful dismissal claims. This includes holding a disciplinary hearing, allowing the employee to defend themselves, and explaining the results of the investigation.
The maximum award for a wrongful dismissal claim at an employment tribunal is £25,000. There is no compensation cap in the civil courts.
Contact our wrongful dismissal lawyers
Helping employers and employees alike, our specialist employment lawyers can advise you on the likely consequences of any wrongful dismissal claim, support you through the process, and ensure you get the most favourable outcome possible.
As we work for employers and employees alike, we understand how the other side thinks, anticipate their moves, and use this knowledge to your advantage.
Our team is here to help with all your employment law needs, including complex and sensitive issues. For your free initial consultation, please contact our wrongful dismissal solicitors today at 020 4586 4575 or complete our website enquiry form.